Mortgage lending decline in August but summer levels are "stable"

21/09/2009

Mortgage lending fell by 13 per cent from July to August, but a seasonal drop in lending was expected according to the Council of Mortgage Lenders.

Gross lending is estimated at £12.6bn in August, that's 37 per cent lower than August 2008's lending total of £19.9 billion.

But the decline in lending doesn't necessarily mean bad news. According to the CML, lending levels have stabilised during the summer – the UK is reaching a balance between higher lending for house buying and lower levels of remortgaging.

This could be a sign of people seeking alternative ways out of debt. debt solutions firm EuroDebt says re-mortgaging to repay debts is still a difficult option for someone with an impaired credit file even if there is equity in the property.

As a result, the debt management company says non-borrowing options are becoming increasingly popular. Debt Management Plan'>Debt Management Plans and IVAs are the favoured option for people looking to tackle unmanageable unsecured debt on credit cards, store cards and personal loans.

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